European Central Bank ready to increase buying of Italian bonds after the referendum

The European Central Bank is ready to temporarily increase purchases of Italian government bonds. This can happen if the result of the referendum in the country sharply raise the debt service for the largest debtor in the Eurozone and lead to turmoil in financial markets.

The European Central Bank can use its program of quantitative easing to stabilize the Italian finances. In its monthly purchases of assets for 80 billion euros or 84.8 billion dollars, and by this move financial institution will resist further rise in Italian government bond yields after the vote.

Meanwhile the yields on Italian bonds went to a weekly bottom on Tuesday. And according to sources, the scheme of the European Central Bank is flexible enough to allow for a temporary increase of the Italian purchases.

The Management Board of the financial institution will decide during the meeting, to be held on the eighth of December. The meeting will involve whether to keep buying bonds after March.

The most important is European Central Bank to ensure that instability can be overcome by this flexibility and by the quantitative easing program.